Rationalisation of tariff lines, import duties big leap towards ease of doing biz: ICEA

NEW DELHI: The recent announcement regarding adjustment of basic customs duty to 10 per cent on parts of mobile phones and mechanics symbolises the start of a paradigm shift in the approach in policy formulation of the government towards export-led growth and competitiveness, the India Cellular and Electronics Association (ICEA) said on Friday.

The adjustment of basic customs duty to 10 per cent on other inputs for mobile phones classified as ‘Others’ will also reduce the possibilities of misinterpretation by custom formation and subsequent litigations during the import of mobile phone inputs.

"We, as a nation, should further address tariff rationalisation to build competitiveness in the international market. This is vital to unlock our potential in global electronics manufacturing and trade and integrating India to global value chains (GVCs)," ICEA Chairman Pankaj Mohindroo said.

The import duty on "Others" under "HS code 85177990" was never intended to be at 15 per cent as it was raised from 5 per cent to 15 per cent in 2018 without any industry consultations, the ICEA said.

"Similarly, import duty on mechanics and its inputs was never mentioned in the PMP architecture, the removal of duty on inputs for mechanics is appreciated as it is only a realignment with the original PMP framework," it said.

ICEA rigorously followed these issues for the last five years with all relevant government agencies.

"This took a lot of relentless effort. We made an in-depth study to justify industry demands," said Mohindroo.

A report, titled “A Comparative Study of Import Tariffs impacting India’s competitiveness in Mobile Manufacturing & Exports,” was made by ICEA and presented to all relevant authorities. The study delved into detailed research on comparative import tariffs on inputs used for the manufacture of mobile phones, and 65 tariff lines across 7 competing nations.

The findings suggested that India has the highest tariffs on mobile phone inputs. India’s simple average MFN tariff on inputs is 8.5 per cent which is higher than China’s 3.7 per cent.

"Electronics can become top three exports from India in two years. Electronics has improved from the 9th position a few years ago to India’s 5th largest export in 2024.

"Mobiles constitute over 52 per cent of electronics exports, thanks to the PLI scheme. This is the first industry to leapfrog out of import substitution to export-led growth within the last 8 years. Government has been an excellent and willing partner in this transformation," said the report.